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The leaders of the United States often forget that there is another country between here and the North Pole. Washington often moves without caring about its effect on our northern neighbors, especially in matters concerning energy.

Thus, we have had to observe the spectacle created over Keystone XL, a proposed pipeline that would move Canadian oil from Alberta to American refineries that have specialized technology well-suited to process it. Those refineries face dwindling supplies of heavy oil from Mexico and Venezuela.

Some of the Canadian petroleum would be consumed in the U.S. as gasoline, diesel fuel and jet fuel; some of these refined products would be exported. In both cases, there would be significant profits for Canadian producers and transporters and for U.S. refiners, transporters and retailers.

There might also be a few thousand construction jobs created along the way, and prices at the nation's gas stations eventually might go down a bit, although neither of these secondary effects is as important as the potential profit. That's the proper reward for building infrastructure that would move a commodity from a place where it is abundant to a place where it is relatively scarce and relatively valuable.

Instead, Keystone XL has become a horrible example of the market failures imposed by U.S. politics.

Environmental Obstruction

Oil from Alberta has been imported by the U.S. for years. This wasn't controversial in 2005, when
TransCanada
proposed the Keystone Pipeline, a $5 billion transport system more than 2,000 miles long. That pipeline was approved and built in a mere six years.

The first phase, completed in 2010, runs from Hardisty, Alberta, to a refinery in
Wood River,
Ill., near St. Louis, and storage facilities in Patoka, Ill. A branch, completed in 2011, extended deliveries of Alberta oil to Cushing, Okla., the self-proclaimed "pipeline crossroads of the world." It is also a center of storage and refining.

The Keystone Pipeline opened a new market for 500,000 barrels a day of oil mined or steamed from the sands of northern Alberta, a resource region that could be the world's second- or third-largest oil reserve if the price of oil remains high. The oil is certainly there, but it costs a lot to extract bitumen from the oil sands and convert it to petroleum.

Added to the financial cost, however, is the cost in extra carbon-dioxide emissions from the energy used to gather bitumen and transform it to oil. The emissions contribute to global warming.

Assumptions about the high price of oil have driven rapid exploitation of Alberta, which now produces 1.5 million barrels of oil a day, with the potential of 3 million to 5 million barrels by 2030. More pipelines and more refining would be necessary to reach that potential. Even before the Keystone Pipeline was complete, TransCanada was proposing another pipeline, dubbed Keystone XL, that would run to Cushing by a shorter route, thence to refineries along the Gulf of Mexico.

Resource Denial

Assumptions about global warming have led some environmental activists to focus on the Alberta oil industry. Their goal is to shut it down, much as they have halted exploitation of known resources off Florida and California, known resources in Alaska, known resources in deep waters of the Gulf of Mexico and much as they would like to shut down known resources in shale formations from North Dakota to New York recently made economic by advances in the technology of hydraulic fracturing.

Keystone XL also has been challenged by lawmakers and activists in Nebraska who say the pipeline might break and spill oil into the Ogallala aquifer, a major source of water for Nebraska ranchers. This is not impossible, but after the world's many years of experience with operating oil pipelines, it's a bit like refusing to allow airplanes to fly over Nebraska for fear they might crash.

In a longstanding fit of absentmindedness, Congress has never legislated a process or an agency to approve international pipelines. The 10th amendment to the Constitution might have been read to leave such questions to the states, but modern presidents do not care to read that amendment, or anything else that might limit their power. Several chief executives have asserted their power to say yea or nay to international pipelines, although the State Department usually does the data-mining and rule-writing.

Previous pipelines received mild scrutiny, at least by the clumsy standards of U.S. energy regulation. Some 2.5 million barrels of oil are pumped from Canada every day, a trade that enriches both countries.

President Barack Obama left Keystone XL to the State Department until it became the subject of frequent demonstrations outside the White House. Protestors warned that they would lose their enthusiasm for the president if he didn't live up to their environmental expectations.

Convenient Delay

On Nov. 12, the White House and the State Department decided to give the pipeline route more study, at least until after the election in November, 2012. "This was not a political decision," said an assistant secretary of state who must have practiced in front of a mirror to keep a straight face.

Political or not, final or not, investors and consumers should hope that the Keystone XL non-decision will not much hamper the development of the Alberta oil resource. Petroleum can be shipped to the U.S. by truck or train, and the capacity of existing pipelines can be increased, all without a pass from the State Department or the president.

Canadian Prime Minister Stephen Harper, offered another possibility. He said that his government will work with pipeline companies to ship more Alberta oil to the Pacific coast for export to Asia. Harper observed, however, that the Keystone XL pipeline or something like it will eventually go through "because it makes eminent sense."

But as the U.S. government has shown, making sense doesn't have the same priority as political survival.